Chrysler trust VEBA values its share of company at $3.6 billion

Reuters Staff

3 Min Read

DETROIT (Reuters) - The United Auto Workers-affiliated healthcare trust valued its ownership stake in Chrysler Group LLC at $3.6 billion by the end of 2012, up from $2.7 billion the previous year, a recent filing with the U.S. Department of Labor.

The Chrysler logo is shown on a new Chrysler 200 on the showroom at the Massey-Yardley Chrysler, Dodge, Jeep and Ram automobile dealership in Plantation, Florida October 8, 2013. REUTERS/Joe Skipper

Sergio Marchionne, chief executive of both Fiat and Chrysler, wants Fiat to buy from Chrysler’s healthcare trust the remaining shares of Chrysler.

This has been complicated by an initial public offering that the Chrysler healthcare trust forced the company into filing last month.

According to the filing with the Labor Department, the Chrysler healthcare trust had net assets at the end of 2012 of $10.29 billion, up 18 percent from the start of the year.

Marchionne took over as CEO of Chrysler after its 2009 government-sponsored bankruptcy and restructuring.

Fiat and the Chrysler healthcare trust have been before a Delaware court judge since last year fighting over the value of a 16.6 percent tranche of Chrysler.

On Monday, a judge on the Delaware Court of Chancery set a five-day trial to begin next September 29. Fiat had sought a May trial date.

Analysts have said it is possible that both the IPO and the court issues will be settled by negotiations between Fiat and the Chrysler healthcare trust.

Under Marchionne, Chrysler has mounted an unlikely comeback that has pushed its valuation to around $10 billion, according to some analyst estimates. The U.S. automaker is now propping up Fiat’s bottom line, rather than the other way around.

Chrysler’s success has complicated Marchionne’s efforts to buy out the healthcare trust. The more than $5 billion price tag pushed for by adviser Brock Fiduciary represents the highest possible payout under the terms of the bankruptcy agreement.

UAW trusts for retired auto workers were set up in 2007 at Chrysler, as well as at General Motors Co (GM.N) and Ford Motor Co (F.N) as a way for the financially struggling U.S. automakers to offload their obligation to pay retiree healthcare benefits.

The trust was initially supposed to be funded with cash. But as part of the 2009 financial crisis, the union agreed to take stakes in GM and Chrysler in lieu of cash.

In reports filed with the Labor Department, the GM healthcare trust said it ended 2012 with net assets of $29.97 billion, up 5.8 percent, and Ford’s healthcare trust showed net assets of $15.88 billion, up 5.4 percent.